Understanding attrition in the workplace

What is attrition? 

Attrition refers the reduction of employee numbers when they are not replaced by new hires. This can happen if your hiring process breaks down, when the recruitment market is sluggish or if big changes at your organization cause a lot of people to leave at once.

It’s also worth noting that attrition only happens when employees leaving outstrips new hires, and sometimes this can be done deliberately to reduce costs. This is usually referred to as downsizing or a hiring freeze. Attrition isn’t necessarily a bad thing, but you need to make sure you understand it to get it under control. 

Controlled attrition can be useful, and often more cost-effective, but uncontrolled attrition is a very bad thing, as it means you can lose valued employees, spike your hiring and training costs and suffer knowledge loss. Remember, the cost to hire and train a new employee is about two times the employee’s annual salary, so a short-term cost saving can lead to long-term problems. 

Types of attrition

The causes of attrition can vary hugely depending on the industry you work in and the environment around you. However, there are three key umbrella terms that you should get a handle on. 

• Involuntary attrition 

This occurs when you fire an employee. It could be due to poor performance, disruptive behavior or even misconduct. It can also involve laying off employees due to economic reasons.  

• Voluntary attrition 

This is where employees actively choose to move to a different employer. There are a huge range of reasons as to why this might happen, from moving to a new region (which makes commuting impossible) to trying a new career path.

• Retirement attrition 

Retirement is another form of voluntary attrition, also known as natural attrition. Retirement is rarely unexpected, so it should be pretty easy for you to account for it.  

Managing attrition

How you handle attrition depends on what kind you’re dealing with. 

Involuntary attrition can be hard to predict and control, especially when it’s related to negative behavior. Have robust policies and procedures in place to make these moments as painless as possible, and you’ll reduce the risk of collateral damage. Likewise, sometimes layoffs are unavoidable, but you should consider the impact on your brand as an employer if you engage in them as standard practice. If you’re seen as less stable, people will be less keen to work with you. 

By having a stronger recruitment process, using skill-based and behavior questions you might find it easier to screen out poorly performing candidates early. 

For voluntary attrition, the solution is a lot more complex. Finding effective employee retention strategies is key. For example, if you have a lot of employees moving away, a remote or hybrid policy might help keep some people closer. Likewise, looking at your rewards package (which can include salary but also things like vacation time, health insurance, salary sacrifice and other benefits) can help keep employees wanting to stay.